Dive Brief:
- General Mills plans to overhaul its aging supply chain, COO Dana McNabb said on a July 1 earnings call.
- The supply chain redesign is critical because the company's current network was built for a lower-volume era, McNabb told investors, noting that the revamp is still in the early stages.
- "We've seen that we need faster innovation, more packaging flexibility," McNabb said. "And so it's really about thinking, how do we reimagine the supply chain for the future so we can get that profitable growth."
Dive Insight:
General Mills' upcoming supply chain revamp is a piece of the company's plans to restore profitable organic sales growth through $3 billion in cumulative cost savings by 2030. About $2 billion in savings will include a more targeted focus on products and trends.
The network overhaul will contribute to the additional $1 billion in savings the company expects to achieve by improving business processes and identifying new ways of working with technology and operating models, according to McNabb.
"These savings are critical to help offset inflation, to fund our growth investments, and support stronger earnings and cash flow over time," Chairman and CEO Jeffrey Harmening said in the call. The company expects to save $750 million in the current fiscal year, which started May 26.
General Mills's supply chain restructuring comes amid personnel changes. The company promoted McNabb to COO in June, giving her oversight of innovation and the supply chain. The company also added transformation to Chief Digital and Technology Officer Jaime Montemayor's title earlier this year.
Supply chains are shifting across the consumer packaged goods sector as less predictable consumers pressure demand planning, Jeremy Tancredi, a partner in West Monroe's supply chain practice, said in an email to Supply Chain Dive.
"To stay in sync with the ever-changing market, CPG companies need to rethink their entire supply chain to enable faster decision-making and improve flexibility," Tancredi said.
Packaging agility — a key goal in General Mills’ supply chain modernization — has also become more important to CPGs to support omnichannel distribution, Tancredi said.
“Packaging increasingly needs to be optimized for multiple logistics models and channel-specific assortments to help minimize costs,” Tancredi said.
Other CPG companies that have launched supply chain restructurings or major technology upgrades to cut costs and improve operations include Procter & Gamble, which rolled out its supply chain redesign companywide this year.
Meanwhile, Clorox is shifting its U.S. supply chain and other operations to a new ERP system, and Nestlé is transitioning to SAP S/4HANA in part to use AI to improve efficiency in procurement, supply chain management and order fulfillment.
